This chapter focuses on the development of two related bacteria that have proven to be effective in a variety of physical and chemical processes: Escherichia coli and Klebsiella oxytoca. Development of recombinant microbes that utilize a variety of sugars for ethanol production in laboratory media under optimum growth conditions has been repeated by several laboratories around the world. The use of dilute acid at temperatures above 140ºC is effective for the hydrolysis of hemicellulose in bagasse without significant loss of sugars or the production of degraded by-products. Dilute acid hydrolysis of hemicellulose has been used in order to produce high concentrations of hemicellulose sugars for fermentation by E. coli strain KO11-RD1. The yield of ethanol from acidic hydrolysis of cellulose is limited due to the poor recovery of glucose during the acid hydrolysis process. The degradation of glucose occurs very rapidly under conditions necessary for cellulose hydrolysis. Therefore, the use of cellulolytic enzymes has been pursued for several decades as a means of increasing the ethanol yield from cellulose. The simultaneous saccharification and fermentation (SSF) model has the following advantages over the sequential hydrolysis and fermentation process model: (i) lower enzyme dosages required for efficient conversion, (ii) compatibility with coproduction of enzymes during ethanol fermentation, and (iii) lower free-sugar concentrations during the SSF process.